Question : Profits of last three years are Rs.4,20,000, Rs.3,90,000 and Rs.4,50,000. The value of goodwill on the basis of two years purchase of three year average profit is:
Option 1: Rs.3,60,000
Option 2: Rs.12,60,000
Option 3: Rs.8,40,000
Option 4: Rs.4,20,000
Answer (1)
20th Jan, 2024
Correct Answer: Rs.8,40,000
Solution :
Average profit = Sum of profits/Total number of years = (Rs.4,20,000 + Rs.3,90,000 + Rs.4,50,000)/3 = Rs.4,20,000.
Goodwill = Average Profit X Number of years purchase = Rs.4,20,000 X 2 = Rs.8,40,000.
Hence, the correct option is 3.
Comments (0)
